When travelling abroad, you can shop at duty-free stores to purchase for yourself and souvenirs. A wide range of products, such as alcohol, perfume and electronic gadgets, can be purchased without tax. Duty-free shops are often located in international airports and seaports. When you shop duty-paid products at retail outlets, you will be charged the full price.
Let’s understand the difference between duty-free and duty-paid.
What is meant by the term ‘duty’?
Duty is a tax levied on certain imported or exported goods. It is calculated as a percentage of the product’s total value. Duty is legally enforced and a source of revenue.
What is meant by ‘duty-free’?
Duty-free means goods can be purchased without paying import, sales, local or value-added taxes. These products are sold with the understanding that they will be used outside the country of purchase. International travellers can find them at duty-free shops in airports, seaports, and border crossings.
What is meant by ‘duty-paid’?
Duty-paid products are those on which the tax has already been levied. These items are comparatively costly, as the import taxes significantly increase their value. However, duty-paid items can be purchased anywhere in the country at retail outlets.
What is the difference between duty-free and duty-paid?
Here is a duty-free vs. duty-paid comparison to help you understand the differences.
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Duty-free
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Duty-paid
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Tax exempted
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Tax is levied on goods
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Consumers don’t need to pay any taxes on the goods.
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The price paid includes the taxes.
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Duty-free items are sold at specific stores at airports, seaports or border crossings.
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Duty-paid items are sold at retail stores across the country;
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These items are available for purchase only to departing international travellers.
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Anyone can purchase these items.
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Only specific items are sold in duty-free stores.
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More variety and locally produced goods are sold in duty-paid stores.
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Products sold are for personal consumption.
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No purchase restrictions are applicable.
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Conclusion
Duty-free products are generally better than duty-paid as they are more affordable. However, for non-international travellers, the distinction doesn’t matter. If you plan a trip to a foreign country, buy a single-trip travel insurance. It will cover medical and non-medical emergencies during the trip. You can easily obtain an international travel insurance online.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.